Today the FCC adopted, on a 3-2 vote, an order that finds that Comcast's management of its Internet services violated the FCC's 2005 Internet Policy Statement and requires Comcast to take remedial action. The press release can be found at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-284286A1.pdf, and the Commissioners' public statements can be found at the following URLs: http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-284286A2.pdf (Martin), http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-284286A3.pdf (Copps), http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-284286A3.pdf (Adelstein), http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-284286A5.pdf (Tate) and http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-284286A6.pdf (McDowell).

Overview

This order is the FCC's response to a complaint concerning Comcast's use of techniques that effectively blocked access to BitTorrent, a well-known file-sharing service. According to the press release, the order finds that Comcast's "management of its broadband Internet networks contravenes federal policies that protect the vibrant and open nature of the Internet[.]"

The decision was adopted on a 3-2 vote, with the two Democratic commissioners joining Chairman Martin and the other two Republicans dissenting. It was apparent from the public meeting that at least one of the dissenters, Commissioner McDowell, was frustrated with the result and with the process used to adopt the order.

The immediate consequence for Comcast is that must disclose all of the details of the practices that are addressed in the order within 30 days after the order is released; must end these practices by year's end; and must disclose any new network management techniques that it will use "to customers and the Commission."

This decision represents the first time that the FCC has issued an order that enforces the principles adopted in its 2005 Internet Policy Statement. Based on the press release and the Commissioners' statements, it does not appear that the FCC intends to limit the effects of this order to Comcast, and the order likely announces specific requirements that the FCC will expect to apply to all network management by broadband Internet service providers.

Background

This proceeding began when the FCC received a complaint in November, 2007 concerning Comcast's approach to managing traffic generated by customers who use BitTorrent to exchange files. The complaint alleged, among other things, that Comcast was targeting BitTorrent traffic and effectively blocking it without informing customers of this practice.1

The complaint argued that this practice was a violation of the FCC's 2005 Internet Policy Statement, which adopted four principles that the FCC said it would "incorporate . . . into its ongoing policymaking activities." Although those principles were not adopted as rules, the policy statement claimed that the FCC "has the jurisdiction necessary to ensure that providers of telecommunications for Internet access . . . are operated in a neutral manner."

The proceeding generated wide attention and a very substantial record. The FCC received more than 6,500 comments and held two separate public hearings on issues raised by the complaint and Comcast's practices. In addition, there was substantial Congressional involvement, including correspondence yesterday from the House Minority Leader seeking to prevent today's decision.

The FCC's Findings

The press release and the public statements of the Commissioners indicate that the FCC made a series of specific findings in determining that Comcast had violated its obligations under the Internet Policy Statement. Those findings included the following:

  • "Comcast's network management practices discriminate among applications rather than treating all equally[.]"
  • Comcast's practices "are invasive and have significant effects" and that "Comcast's conduct affected Internet users on a widespread basis," interfering with "up to three-quarters of all peer-to-peer connections in certain communities."
  • Comcast's practices "had the effect of substantially impeding customers' ability to access the content and to use the applications of their choice."
  • Comcast's practices were not "reasonable network management," in large part because they "are ill-tailored to serve that goal[.]"
  • The harms caused by these practices "have been compounded by the company's unacceptable failure to disclose its practices to consumers," including telling customers that any issues were not caused by Comcast.

The FCC's Authority To Act

The press release does not describe the basis for the FCC's power to act in this case, but Commissioner Adelstein did provide significant extension of the scope of the FCC's claimed authority. an explanation in his separate statement. According to his statement, the FCC relied heavily on the Supreme Court's 2005 decision on broadband Internet service in the Brand X case, where the Court stated that the FCC "has jurisdiction to impose additional obligations" on Internet providers.

Adelstein also said that the order claims authority under no fewer than seven provisions of the Communications Act:

Notably, the Order is firmly based on the Congressional policies set forth in Section 230 of the Act. Section 230 states that it is the "policy of the United States" to "promote the continued development of the Internet" and to "encourage the development of technologies which maximize user control over what information is received by individuals . . . who use the Internet...." * * * *

As the Order correctly concludes, taking action against discriminatory practices advances federal law by encouraging the efficiency of the public Internet, ensuring reasonable charges, and promoting competition, pursuant to Section 1. It encourages the deployment of advanced services, pursuant to Section 706. It ensures the reasonableness of charges incurred by preventing providers from shifting costs to customers who purchase DSL as a common carrier service, pursuant to Section 201. It promotes the flow of information across public telecommunications networks, pursuant to Section 256. It eliminates barriers to entry for entrepreneurs, pursuant to Section 257. And, it improves individuals' ability to access a diverse array of content over the Internet, pursuant to Sections 257 and 601.

This description suggests that this order may contain the most extensive discussion to date of the FCC's authority to regulate the Internet and Internet providers. It is particularly notable for the breadth of the provisions cited by Commissioner Adelstein, some of which apply only to common carriers, and some of which (particularly Section 230) do not appear to be intended to permit regulation.

This suggests that the order may adopt a sweeping view of the FCC's jurisdiction over the Internet, something that is alluded to in Commissioner McDowell's dissent, which says that

Under the analysis set forth in the order, the Commission apparently can do anything so long as it frames its actions in terms of promoting the Internet or broadband deployment.

This broad view of the FCC's jurisdiction is not new, but in other cases the FCC has proceeded more incrementally. For instance, in nearly all of the voice over IP cases, the FCC has asserted its authority merely over the specific functionality at issue in the case, and generally has based that claim on a link to a specific statutory provision. In this decision, it appears that the FCC may be asserting that it has general power over Internet services and, by extension, other information services like email that are provided via communications networks. If that is the case, this decision will represent a significant extension of the scope of the FCC's claimed authority.

The Remedy

While the press release and the statements from Chairman Martin and Commissioner Copps describe Comcast's actions in stark terms, the actual remedy adopted in this proceeding appears to be relatively mild. Comcast will not be required to pay any fines or be subject to any other sanctions. Rather, it will be required to file information with the FCC, modify its network management practices and provide notice of the new practices to the FCC and its customers.

The first requirement is for Comcast to "disclose the details of its discriminatory network management practices to the Commission." Second, Comcast must "submit a compliance plan" for changing its practices by the end of the year. Third, Comcast must "disclose to customers and the Commission the network management practices that will replace current practices."

Comcast will be required to meet each of these requirements within 30 days of the date the order is issued. If it does not, the press release says that "interim injunctive relief automatically will take effect requiring Comcast to suspend its discriminatory network management practices and the matter will be set for hearing."

It is not clear from the press release why the FCC would hold a hearing, but it is possible that the FCC would do so as a way to permit it to fine Comcast for failing to comply with the order. In addition, a public hearing would give the FCC the opportunity to require Comcast to provide information under oath, which potentially would be embarrassing for the company.

Implications For Other Providers

This is an unusual proceeding for a matter that has such a high public profile. As a technical matter, the only party before the FCC was Comcast; the only issues being considered were those related to Comcast's specific network management practices; and the practices of other Internet providers were not at issue. At the same time, however, any FCC decision sets a precedent that can be followed in other cases, and the commissioners were very direct in saying that this decision would affect other providers.

Based on the commissioners' statements and the press release, it appears that this order will adopt some generally applicable requirements. It seems certain that it will, at a minimum, declare that the Internet Policy Statement is an enforceable order of the FCC. That will mean that parties can submit complaints based on what they believe are unreasonable practices that violate the principles in that statement. It would not be surprising if some parties, such as providers of file-sharing software or content providers, start to file complaints seeking to test the limits of the principles.

It also appears that some practices will be subject to very close scrutiny if the FCC receives a complaint about them. In particular, the statements from Commissioner Copps and Commissioner McDowell indicate that the FCC has adopted a framework for evaluating complaints about network management practices. According to Commissioner Copps, not all discriminatory practices will be prohibited, but there will be "a high threshold for demonstrating that a discriminatory network management practice is reasonable[.]" Commissioner McDowell noted that this threshold was so high that, in his view, it amounted to "strict scrutiny," a standard that generally is applied only to violations of fundamental Constitutional rights.

Based on these statements, it appears that the FCC will apply a test with at least two parts to any complaint about a network management practice. That test would first determine whether the practice is discriminatory. If a practice is found to be discriminatory, the FCC would then evaluate whether there is sufficient justification for the discrimination, and that standard likely would be very hard to meet.

It also appears that the order may announce an obligation for Internet service providers to disclose their network management techniques to their customers. While this is not discussed in the press release, Chairman Martin's statement indicates that "[w]e do say that providers should disclose what they are doing to consumers."

Nevertheless, it does not appear that the order will create a broad regime of regulation for Internet service providers. The commissioners' statements reflect an intent to address issues under the Internet Policy Statement on a case-by-case basis (a source of some frustration for Commissioner McDowell). They also indicated that certain topics are not addressed in the order. For instance,

Chairman Martin noted that the order does "not address pricing, unbundling, or other economic regulation" and that it will permit providers "to prioritize voice-over- IP calls." Chairman Martin and the press release both emphasized that service providers "can block any illegal content or applications that are intended to harm the network." Martin even suggested that "blocking illegal content could go a long way to reducing bandwidth congestion."

Effects On Network Planning

In light of this decision, Internet service providers may need to adjust their network management practices once the order is released. They also may need to disclose those practices to their customers.

It may be prudent for Internet providers to review their practices to see if they could be considered to target particular applications. This may not be very easy, because otherwise neutral practices might have disproportionate impacts on certain individual applications. In addition, in the absence of specific guidance from the FCC, it may not be apparent what will be considered discriminatory.

One consequence of the possibility of a disclosure requirement is that providers may not be able to adopt new network management tools until they have told customers they are doing so. This could require providers to delay deployment of new network management technologies and could impose substantial costs.

A potential solution to many of the concerns that could be raised by this order is for providers to adopt specific limits on bandwidth usage by their customers, or even on the time that customers are connected. However, it is likely that many of the heaviest users of Internet service would complain about such limitations, and it is not apparent how the FCC would react to such complaints.

Next Steps

As described above, under the terms of the order, Comcast will be required to respond to the FCC within 30 days of the time the order is released. Comcast is likely to appeal the order, and may seek a stay from the U.S. Court of Appeals. If a stay is granted, then Comcast will not have to comply with the order until the appeal is decided.

The FCC has indicated that it intends to continue to address Internet issues through the adjudication process, rather than through a rulemaking. This suggests that the current commissioners do not intend to take further action on the 2007 broadband inquiry, which was adopted about 16 months ago.2 It is possible, however, that new commissioners who take office in the next presidential term will use that proceeding as a vehicle for broader action.

Footnotes

1 The complaint also argued that other types of traffic were being blocked in the same way.

2 This inquiry is described in more detail in the April 17, 2007 edition of Voice over IP News.

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